Valuation of a Portfolio of High Street Banks

10th November 2010

Wright & Partners were instructed by the Trustees of a Charity to value a newly created interest in a portfolio of 102 high street banks the freeholds of which were owned by another Charity.

The freeholder charity had agreed to grant a 999 year long leasehold interest in which the charity would take a 50% share. The consideration for such an interest was to be made in stage payments over a period of two years with the acquiring charity receiving the rental income on a pro rata basis.

All of the properties, which were in smaller towns or suburbs, were let to a single occupational tenant, one of the UK’s leading banks, and the leases were standard throughout the portfolio save for rent which varied according to size and location of the branches.

Wright & Partners analysed the terms of the leases and the wide variety of locations and how such investments would be received by the wider investment market. It was the Practice’s opinion that the investment, both as individual properties and as a single portfolio, would be viewed very favourably. It satisfied the current critical elements of property investment: specifically, in good locations, very well let to a particularly strong covenant with attractive unexpired terms and, importantly, there were fixed rental uplifts which guaranteed future rental income growth for the Charity.

A comprehensive report was prepared for the Trustees and a valuation carried out in accordance with RICS guidelines which also satisfied the Charities Commission’s requirements.

The value of the proportion of the long leasehold interest acquired by the charity was in the order of £27,000,000.